Nortel (NT) used to be top of the heap – or very close to it – in communications.
In the days of old, the top communications vendors included AT&T Network Systems (which later became known as Lucent Technologies and is now part of Alcatel-Lucent), Ericsson, Siemens and Nortel (which in the early days was known as Northern Telecom). That is to say, of course, these were the vendors that outfitted the telcos with Class 5 switches.
Of course years later the Internet, IP communications at large and, later, what is now known as Carrier Ethernet, hit with gale-force winds and whipped up a lot of new challenges and possibilities for both service providers and their vendors. Still, the traditional telecom vendors, in large part, have been able to maintain a hold on large service provider customers, who over the years have come to rely on them for products, systems integration, other technical know-how and the piece of mind that working with a large, established vendor can bring.
Like so many companies, the traditional telecom vendors listed above have gone through their own trials and tribulations.
Nortel, like so many others, has been searching for the right strategy. The company years ago made a push into broadband gear, but didn’t stick with that line. Nortel also made a play in the UMTS, but sold that part of its wireless business to Alcatel in 2006.
What Nortel has probably been best known for in recent years is its Ethernet and optical gear; but the company recently announced intentions to part even with these gold-standard assets, only to be low-balled during what has become an increasingly grim economy. Sad.
Sadder still is the news that Nortel may be considering bankruptcy and faces delisting if it can’t bring its stock above $1 in the next six months.
The downfall of a once-great company, I know, is by no means unprecedented.
Still, the question remains, what went wrong at Nortel?
1.) Some have opined that at least part of the problem with the company’s service provider business resulted from the absence of a visible leader pushing Nortel’s message and overall marketing strategy.
2.) It’s also been said that product development was the issue.
3.) Then there’s that little problem of an economy that has reportedly seen many service providers put the brakes on, or at least slow, their network upgrades.
Nortel has billions in debt, but had it been in better financial shape prior to the recession, would it have been able to ride this thing out? Or was Nortel in big trouble regardless?
